- The Washington Times - Tuesday, July 2, 2002

NEW YORK (AP) Mounting concerns about accounting scandals and the health of the nation's companies prompted investors to again sell stocks sharply lower yesterday. The high-tech dominated Nasdaq Composite Index finished under its post-September 11 closing low, while the Dow Jones industrials tumbled more than 130 points.
The Nasdaq also reached its lowest close in five years.
Skittish investors ignored an upbeat report about the nation's manufacturing activity, focusing instead on negative company news as they await the next round of corporate earnings reports for a clearer picture of how businesses are faring.
"There is an overall distrust of Wall Street, and so people are ignoring the economic data," said Brian G. Belski, fundamental market strategist at U.S. Bancorp Piper Jaffray.
The Nasdaq fell 59.41, or 4.1 percent, to 1,403.80. Its post-September 11 closing low was 1,423.19, reached Sept. 21.
Yesterday's Nasdaq closing was the lowest for the index since June 10, 1997, when it finished at 1,401.69. So far this year, the Nasdaq is down 28 percent.
The Standard & Poor's 500 index dropped 21.17, or 2.1 percent, to 968.65, less than 3 points above its Sept. 21 close. The S&P; is off 16 percent for the year.
Yesterday's economic data was mixed. The Commerce Department said construction spending fell by 0.7 percent in May to the lowest level in five months.
But the Institute for Supply Management said its index of business activity rose to 56.2 percent in June from 55.7 percent in May. It was the fifth straight month that manufacturing activity increased.
"These are the best levels we've seen in two years in terms of manufacturing data," said Kevin Caron, market strategist at Ryan, Beck & Co. "It will ultimately lead to higher earnings, which is what we need to see for stock prices to move higher."
But many investors are waiting to see results of earnings reports for the second quarter, scheduled to begin next week. Market watchers said it will take solid economic news from companies themselves to turn the situation around.


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